Before you sign a contract in Qatar: the clauses to check

Why review a contract before signing?

A contract is the law of the parties: it can be revoked or changed only by agreement or on grounds the law allows (Civil Code Article 171). Where the wording is clear, it cannot be reinterpreted (Article 169). What you sign is what you will be held to.

Which clauses should you check?

1. 1

   Parties and authority to sign: match the name, legal form and commercial registration number, which a company's contracts must state (Companies Law Article 16). A company is bound by its manager acting in that capacity, and limits on the manager's powers bind third parties only once noted in the commercial register (Article 242). If an agent signs, ask for the power of attorney: acts beyond it do not bind the principal unless ratified (Civil Code Article 87).

2. 2

   Scope: define what is owed clearly enough to avoid gross uncertainty, or the contract is void (Article 150). Set out specifications, delivery dates and acceptance criteria.

3. 3

   Payment and security: fix the amount, currency and dates. A personal surety can be proved only in writing (Civil Code Article 809), and sureties for a commercial debt are jointly liable with the debtor (Commercial Law Article 76). A bank's on-demand bond is payable on request during its validity, and the bank is released if no demand arrives in time (Articles 406 and 411), so check the expiry date.

4. 4

   Penalty clause: tie the amount to a specific obligation and keep it realistic, because a judge can reduce it (Civil Code Article 266).

5. 5

   Termination: set out the grounds, how and when notice is given, and what each party pays on termination.

6. 6

   Governing law and jurisdiction: state both expressly, especially if one party is foreign.

7. 7

   Arbitration: if you want it, write it down, with the seat, language and number of arbitrators or the institution's rules.

8. 8

   Language: if the contract is in two languages, say which version prevails.

9. 9

   Notarisation and registration: check whether the law requires a particular form for this type of contract.

What can a judge do with a penalty clause?

The Civil Code allows the parties to fix compensation in advance where the obligation is not a sum of money (Article 265). The judge keeps control over it:

• The agreed amount is not due if the debtor proves the creditor suffered no harm.
• The court may reduce it if it is grossly excessive or the obligation was partly performed, and any agreement to the contrary is void (Article 266).
• If the harm exceeds the agreed amount, the creditor cannot claim more unless there was fraud or gross fault (Article 267).

For late payment of money, compensation is awarded only after formal notice and proof of harm (Article 268), so draft late-payment terms with care. Liability may be excluded except for fraud or gross fault, and exclusion clauses are read narrowly (Articles 259 and 170). In standard-form contracts, a judge may modify or remove abusive terms (Article 106).

If exceptional, unforeseeable general events make performance so onerous that it threatens heavy loss, a judge may reduce the obligation to a reasonable level, and the parties cannot contract out of this (Article 171).

How does a contract end if the other side defaults?

In a contract with obligations on both sides, if one party does not perform, the other may, after formal notice, ask for termination with compensation. The judge may give the debtor more time, or refuse termination if the breach is minor (Article 183).

The parties may agree that the contract ends automatically on default, but only if the wording is explicit, and outside commercial matters formal notice is still needed (Article 184). In commercial matters, notice is given by registered letter with acknowledgement of receipt (Commercial Law Article 81).

If performance becomes impossible for a cause outside the debtor's control, the obligation ends and the contract is terminated (Civil Code Article 188). Define force majeure and how it must be notified.

Which law, which court, or arbitration?

The parties may choose the law governing the contract. Otherwise the law of their shared domicile applies, then the law of the place of contracting, and contracts about real estate follow the law of where it is located (Civil Code Article 27). Foreign law is not applied where it conflicts with public order in Qatar (Article 38).

The Investment and Trade Court hears disputes over commercial contracts and between traders (Article 7 of Law No. 21 of 2021). If one party is established in the Qatar Financial Centre, the QFC Civil and Commercial Court may have jurisdiction unless agreed otherwise (Article 8 of the QFC Law).

Arbitration needs a written agreement; a clear reference to a document containing an arbitration clause is enough (Article 7 of Arbitration Law No. 2 of 2017). The parties may choose the seat, in or outside Qatar, the language and the applicable law (Articles 20, 22 and 28). An award can be challenged only by an annulment claim within one month (Article 33). Arbitration in administrative contracts needs the approval of the Prime Minister or his delegate (Article 2).

What does the law require on language and notarisation?

Arabic is the language of the courts (Article 68 of the Procedure Law), and foreign documents need an Arabic translation before the Investment and Trade Court (Articles 17 and 19). Government bodies must use Arabic in their contracts (Article 2 of Law No. 7 of 2019).

No particular form is needed to make a contract unless the law requires one (Civil Code Article 91). Cases where it does:

For other private documents, a notary can authenticate signatures or certify the date (Articles 21 and 23 of Notarisation Law No. 1 of 2023). The notary checks the parties' identity, capacity and authority (Article 3), and a notarised document recording a certain, fixed and due obligation can carry the enforcement formula (Article 16).

When should you speak to a lawyer?

Reviewing before signing is easier than resolving a dispute afterwards. Signs it is worth getting advice:

• The contract is high in value or long in term, or has a penalty or liability cap.
• The other party is foreign, or the contract chooses foreign law or arbitration abroad.
• The signatory is not the registered manager, or you have not seen the power of attorney or commercial registration.
• The contract is bilingual and does not say which version prevails.
• It concerns real estate, company shares or a government body.
• It is a standard form offered on a take-it-or-leave-it basis.

Questions people ask